EU leaders are edging closer to a final agreement on a budget deal this morning after all-night talks in Brussels. David Cameron wants a either a freeze, or cut in European spending for the next seven years.

The opening bid amounted to a budget proposal of 913 billion euros, or £778 billion for 2014-2020

Twelve hours of discussions produced a new figure early this morning of an estimated 908 billion euros, or £773 billion

Yesterday UK government sources insisted David Cameron wanted to see "tens of billions" of cuts on the opening bid

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The European Parliament President has warned that if EU leaders try to slash the proposed budget, it would be rejected by MEPs.

Martin Schulz said: "We, the representatives of the people, are willing to accept savings. But the further you depart (from the original figure on the table), the more likely it is that your decision will be rejected in the European Parliament.

European Parliament President Martin Schulz

In a dig at David Cameron, who has called for budget cuts, Mr Schulz pointed out that the seven-year budget being negotiated will cover "a time span during which at least one member state has said that it may leave the European Union".

That was just one reason, he said, not to give in to British Government demands to freeze spending until 2020 at 2011.

"We are talking about massive real cuts. I don't know if this can be described as realistic financial planning", he added

European Council President Herman Van Rompuy has chosen not to present a new budget compromise to EU leaders at a summit after sharp splits emerged between key nations, EU diplomats have told Reuters.

"There will be no new proposals [from Van Rompuy]," one source said on condition of anonymity. The impasse could mean that no new proposal is presented at all on the first night of the two-day summit, a second source said.

Van Rompuy had been expected to present a revised budget plan to leaders this afternoon, but that was delayed by more than five hours as meetings among EU leaders showed deep differences in their positions.